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Legal Beat foreign equipment considering price, delivery time or quality (foreign equip- ment not financed may be used as equi- ty) The costs of the guarantee consist of (i) a small $5,000 application fee, (ii) an investigation fee is equal to 5 percent of guarantee amount up to $10,000,000, plus 1.25 percent of guarantee amount in excess of $10,000,000, and (iii) a guarantee fee. The guarantee fee, paid upon issuance of the debt, is financeable and is based on the present value of an annual fee equal to 2.5 percent through 5 percent of guarantee amount during construction and 5 percent through one percent after delivery. Lower fees are charged to borrowers with lower debt- to-equity ratios. Of course, there are other costs, such as investment banking, legal and accounting that vary based on each transaction. Investment banking fees are generally 0.375 percent to 0.5 percent of the principal amount of bonds sold and legal fees typically range from $50,000 to well over $100,000 for com- plex transactions. To be eligible for Title XI financing, a vessel must be constructed, reconstruct- ed or reconditioned in U.S. shipyards, but can be used in either the domestic or foreign trade. Each proposed project undergoes a thorough due diligence review by MarAd, including an eco- nomic feasibility study, financial tests, a review of operating experience, and col- lateral review. MarAd will also need to be comfortable with the ability of the shipyard and its financial strength. The process for obtaining Title XI financing can take from six weeks to several years depending on various fac- tors, including complexity of the trans- action. A typical transaction takes six to nine months. Pre-application meetings and regular contact with MarAd are essential to timely completion of the transaction. After submission of the ini- tial application, MarAd will request additional information and, once all information is obtained, will either reject or accept the transaction within 60 days. If the transaction is accepted, a commitment letter will be issued and documentation will be completed. TEA-21 Grants The Transportation Equity Act for the 21st Century ("TEA-21") created two primary financing sources for ferries: The Ferry Boat Discretionary Program ("FBDP"), which is a discretionary grant program established solely for ferry boats and terminals, and the Con- gestion Mitigation and Air Quality Improvement Program ("CMAQ"), which is not limited to ferries and, in fact, only recently has been used to finance ferry projects. Changes in TEA- April, 2000 21 opened up both the FBDP and CMAQ to private owners and operators, recognizing the important role that the private sector plays in meeting trans- portation infrastructure needs. Ferry Boat Discretionary Program Originally established by the Inter- modal Surface Transportation Equity Act "ISTEA" in 1991, and administered by the DOT's Federal Highway Admin- istration (FHWA), the FBDP encour- ages public and private operators to address marine transportation infra- structure needs. FBDP funds are avail- able for construction or improvement of ferry boats and ferry terminal facilities. FBDP funding has been set at $38 mil- lion per year for each of fiscal years 1999-2003. Of those totals, $20 million per year was earmarked for Alaska ($ 10 million), New Jersey ($5 million) and Washington ($5 million). The remain- ing $18 million per year is available for open competition, subject to certain overall budgetary constraints. The max- imum amount of a project that can be Foam Filled Marine Fenders Marine Guard The Ultimate Protector for Ships, Harbor Craft, Wharves & Piers. • Construction complies with United States Navy and Coast Guard Specifications. • Core consists of closed-cell, resilient, energy absorbing foam, covered with a protective, seamless polyurethane elastomer skin. Filament nylon tire cord reinforcement is continously wound in the skin for added strength and durability. Will not mark or scratch vessel hulls. • Constructed with integral swivel end fittings, internally connected with a heavy duty chain. • Easy to install with very little maintenance. • Light weight and extremely buoyant with a lower reaction force than either hard rubber or pneumatic fenders. (Almost 40% higher energy absorption than pneumatic fenders.) URETHANE PRODUCTS CORPORATION (800) 913-0062 17007 South Broadway, Gardena CA 90248, U.S.A. Tel (310) 532-3662 • Fax (310) 532-9884 Stocking Distributors: Waterman Supply Company 910 Mahar, Wilmington, CA 90744, U.S.A. 1-800-322-3131 Tel (310) 522-9698 • Fax (310) 522-1043 Anchor Marine & Industrial Supply, Inc. 6545 Lindbergh, Houston, TX 77087, U.S.A. 1-800-233-8014 Tel (713) 644-1183 • Fax (713) 644-1185 Circle 305 on Reader Service Card 15
